france telecom orange · january usd 900m raised, maturity 2042 @ 4.88% (after swap in €) (1)...

Gervais PellissierCEO Delegate & CFO

France Telecom Orange

Roadshow in Tel Aviv

June 2012

22

Agenda

introduction to France-Telecom Orange, one of the global leaders in Telecoms

latest results and main financials

2

3

1

a clear strategic and industrial vision

« conquest 2015 » strategic plan: a path to shareholder value creation

4

3

France Telecom-Orange : key highlights

A Global Leader in Telecoms

One of the Most Solid Capital Structure in the Sector

Attractive Yield Supported by Fundamentals

Clear Strategic and Industrial Vision in Changing Environment, both in France and Globally

Conquest 2015: a Roadmap Focused on Shareholder Value Creation

226m customers, 35 countries

2x net debt/EBITDA

40-45% OCF payout / OCF 2012 guidance: €8bn

driving new business models

execution on track

4

introduction to France-Telecom Orange, one of the global leaders in Telecoms1

5

France-Telecom Orange is one of the major telecom companies

around the world

91,191,191,191,1

58,458,458,458,4

30,030,030,030,0

38,538,538,538,5

45,345,345,345,3

53,653,653,653,6

58,758,758,758,7

62,862,862,862,8

79,779,779,779,7

95,095,095,095,0

FY 2010FY 2011

�

�

88

161

141

307

180

650

398

226226226226

300

140

SubscribersSubscribersSubscribersSubscribers

-0,4%

+2,7%

+10,1%

+6,6%

-0,3%

+11,2%

+10,9%

+8,0%+8,0%+8,0%+8,0%

+8,4%

+34,3%

mmmm YoYYoYYoYYoY

Reported sales in Reported sales in Reported sales in Reported sales in €€€€ billions (actuals)billions (actuals)billions (actuals)billions (actuals)

6

SpainSpainSpainSpain

United KingdomUnited KingdomUnited KingdomUnited Kingdom

JordanJordanJordanJordan

EgyptEgyptEgyptEgypt

MauritiusMauritiusMauritiusMauritius

MoroccoMoroccoMoroccoMorocco

MaliMaliMaliMaliNigerNigerNigerNiger

Ivory CoastIvory CoastIvory CoastIvory Coast

SenegalSenegalSenegalSenegal

GuineaGuineaGuineaGuinea Central African RepublicCentral African RepublicCentral African RepublicCentral African Republic

CameroonCameroonCameroonCameroonKenyaKenyaKenyaKenya

UgandaUgandaUgandaUganda

BotswanaBotswanaBotswanaBotswana

MadagascarMadagascarMadagascarMadagascar

TunisiaTunisiaTunisiaTunisia

RomaniaRomaniaRomaniaRomaniaMoldovaMoldovaMoldovaMoldova

PolandPolandPolandPoland

FranceFranceFranceFrance

SlovakiaSlovakiaSlovakiaSlovakia

SwitzerlandSwitzerlandSwitzerlandSwitzerland

GuyanaGuyanaGuyanaGuyana

ArmeniaArmeniaArmeniaArmenia

BelgiumBelgiumBelgiumBelgiumLuxembourgLuxembourgLuxembourgLuxembourg

VanuatuVanuatuVanuatuVanuatu

Dominican RepublicDominican RepublicDominican RepublicDominican Republic

MartiniqueMartiniqueMartiniqueMartinique

GuadeloupeGuadeloupeGuadeloupeGuadeloupe

Reunion IslandReunion IslandReunion IslandReunion IslandCountries where we provide services for residential customers

Countries where we provide services for business customers

our Group provides services for residential customers in 35 countries35 countries35 countries35 countriesand for businesses in 220 countries220 countries220 countries220 countries and territoriesterritoriesterritoriesterritories

IrakIrakIrakIrak

Democratic Democratic Democratic Democratic Republic Republic Republic Republic

of the Congoof the Congoof the Congoof the Congo

PortugalPortugalPortugalPortugal

Guinea BissauGuinea BissauGuinea BissauGuinea Bissau

Equatorial GuineaEquatorial GuineaEquatorial GuineaEquatorial Guinea

it serves 226 million customers in 35 countries …

7

businessesbusinessesbusinessesbusinesses

� 3,750 multinationals3,750 multinationals3,750 multinationals3,750 multinationals

� 2.7 million professionals and small, medium 2.7 million professionals and small, medium 2.7 million professionals and small, medium 2.7 million professionals and small, medium and large businesses in Franceand large businesses in Franceand large businesses in Franceand large businesses in France

� 28 dedicated customer service centres28 dedicated customer service centres28 dedicated customer service centres28 dedicated customer service centres

internet and fixedinternet and fixedinternet and fixedinternet and fixed----linelinelineline

� 9.2 million Liveboxes9.2 million Liveboxes9.2 million Liveboxes9.2 million Liveboxes

� 8.3 million internet telephony 8.3 million internet telephony 8.3 million internet telephony 8.3 million internet telephony customerscustomerscustomerscustomers

� 4.1 million internet TV customers4.1 million internet TV customers4.1 million internet TV customers4.1 million internet TV customers

mobilemobilemobilemobile

� 35 countries35 countries35 countries35 countries

� 157 million customers worldwide157 million customers worldwide157 million customers worldwide157 million customers worldwide

networksnetworksnetworksnetworks� 400,000 km underwater cables 400,000 km underwater cables 400,000 km underwater cables 400,000 km underwater cables ––––

almost 10 times the Earth’s almost 10 times the Earth’s almost 10 times the Earth’s almost 10 times the Earth’s circumferencecircumferencecircumferencecircumference

� 3G networks in 26 countries3G networks in 26 countries3G networks in 26 countries3G networks in 26 countries

… with 172k employees delivering 4 key business lines

8

the Group has a diversified portfolio of activities and a footprint

with complementary dynamics

45,345,345,345,3 €€€€bnbnbnbn

group revenuegroup revenuegroup revenuegroup revenue

19%

15%

8%

4%

50%

9%

group revenuegroup revenuegroup revenuegroup revenue

32%

45,3 45,3 45,3 45,3 €€€€bnbnbnbn

17%

51%

Overview on 2011 financialsOverview on 2011 financialsOverview on 2011 financialsOverview on 2011 financials

Broadband & Fixed line

Enterprise & Wholesale

MobilePoland

RoW

Spain

ICSS

Enterprise

France

By geography By geography By geography By geography By business By business By business By business

group EBITDAgroup EBITDAgroup EBITDAgroup EBITDA

57%

6%

15,115,115,115,1 €€€€bnbnbnbn

20%8%

9%

1%

€€€€9.39.39.39.3 billionbillionbillionbillion

operating cash flow

€€€€45.3 45.3 45.3 45.3 billionbillionbillionbillion

revenue


restated EBITDA


capital expenditure

9

VanuatuVanuatuVanuatuVanuatu

Countries where we provide services for residential customers

managing strong market positions across the footprint

####1111

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####5555 ####3333

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####2222

####1111

####2222

####2222

####1111####2222

####2222 #1#1#1#1####2222

####2222

####1111

####2222

####1111

####3333

####2222

####3333

# mobile market position# mobile market position# mobile market position# mobile market position Main listed subsidiaries

#4#4#4#4

10

1988198819881988

2002200220022002

Sep 2004Sep 2004Sep 2004Sep 2004

Jun 2001Jun 2001Jun 2001Jun 2001

since 1since 1since 1since 1stststst Jan 1998Jan 1998Jan 1998Jan 1998

20 Oct 199720 Oct 199720 Oct 199720 Oct 1997

31 Dec 199631 Dec 199631 Dec 199631 Dec 1996

1991199119911991

� domestic telecommunication operations called France Telecom after being grouped under the name “PTT” (Post, Telegraph, Phone) since 1971

� completion of the acquisition of 49% of Telekomunikacja Polska S.A (started a few years before)

� privatization of France Telecom. French state stake now at 43%43%43%43%

� acquisition of Equant (Enterprise Business)

� Sell of additional stake by the French State and capital increase. State holding ~62%~62%~62%~62%

� new law : FT was incorporated as a French Société Anonyme, 100%100%100%100% state owned

� France Telecom separated from the Ministry of Telecommunications, became a public operator

� France Telecom issued 129 m shares to partly finance the acquisition of Orange PLC owned by Vodafone. French state stake at 56%

� IPO of 25% of the company (250m of shares). The company is listed on the Paris (Euronext Paris) and the New York Stock Exchanges (NYSE). The share is part of the CAC 40 Index.

Dec 1998Dec 1998Dec 1998Dec 1998

July 2000July 2000July 2000July 2000

Dec 2003Dec 2003Dec 2003Dec 2003 � act on telecommunication public service obligations and on France Telecom which authorized the State to own less than 50% of FT’shares

� almost all telecommunications services opened to competition in France

1998199819981998 � launch with Orascom Telecom of Mobinil in Egypt

since French market opening to competition in 1998, France Telecom has

proactively kept growing in an increasingly global context

�

�

Major steps in international developmentMajor steps in international developmentMajor steps in international developmentMajor steps in international development

�

� Major sale of stake by the French State

11

Sep 2005Sep 2005Sep 2005Sep 2005 � France Telecom capital increase to acquire 80% of the capital of Spanish mobile operator Amena. French state stake at 33% percent

Jun 2005Jun 2005Jun 2005Jun 2005 � French State stake decrease to 35% 35% 35% 35%

Jun 2007Jun 2007Jun 2007Jun 2007 � French State stake decreased to 27%27%27%27%

� “Orange” becomes the single brand of the Group for Internet, television and mobile services2006200620062006

Apr 2010Apr 2010Apr 2010Apr 2010 � establishment with Deutsche Telekom of the joint venture Everything Everywhere in the United Kingdom

Jul 2010Jul 2010Jul 2010Jul 2010 � new strategic plan, “Conquests 2015”

� selected acquisitions policy mainly focused on emerging markets

� Greenfield in Central African Republic, Guinea Bissau, Guinea and Niger: 2007, 51% stake of Telkom Kenya: 2007, Uganda: 2008, Greenfield in Armenia in 2009 and in Tunisia in 2010, 40% stake in Meditel (Morocco) in 2010, 44% stake with a partner in Korek (Iraq) and 100% in CCT (DRC) in 2011

Since 2007Since 2007Since 2007Since 2007

Dec 2011Dec 2011Dec 2011Dec 2011 � disposal of Orange Switzerland

in 15 years, France Telecom has expanded globally and built leading

positions over a balanced footprint

�

�

Major step in international developmentMajor step in international developmentMajor step in international developmentMajor step in international development

12

Geographical breakdown of Geographical breakdown of Geographical breakdown of Geographical breakdown of institutional investorsinstitutional investorsinstitutional investorsinstitutional investors

DecDecDecDec----11 shareholder base11 shareholder base11 shareholder base11 shareholder base

67,7% free float 67,7% free float 67,7% free float 67,7% free float (institutional + individual

shareholders)

Number of shares31st December 2011 : 2 648 885 3832 648 885 3832 648 885 3832 648 885 383

(US 24% – Canada 2%)

** o/w 13.4% owned by APE (Agence de Participations de l’Etat), 13.5% owned by FSI (French sovereign fund)

France Telecom is now a major telecom group, listed in Paris and New-

York* and benefiting from a robust and diversified shareholders base

29%

26%

7%

12%

27%France

UK

Rest of Europe

North America

RoW

* Around 100 millions ADR share

4.8%0.6%

treasury shares

26.9%

institutional

individual shareholders

employees6.6%

61.1%

APE + FSI** (French State)

13

strengthening strengthening strengthening strengthening

balance sheetbalance sheetbalance sheetbalance sheet

� Debt divided by two

since 2002, France-Telecom Group has managed to restore a strong

balance sheet while maintaining investment and remunerating

shareholders

delivering attractive delivering attractive delivering attractive delivering attractive

shareholder shareholder shareholder shareholder

remunerationremunerationremunerationremuneration

maintaining the right maintaining the right maintaining the right maintaining the right

level of investment level of investment level of investment level of investment

� Increased maturity

� Despite revenue pressure, CAPEX maintained at the appropriate CAPEX maintained at the appropriate CAPEX maintained at the appropriate CAPEX maintained at the appropriate levellevellevellevel to continue delivering performance

� Domestic market shares at the end of 2011 close to 40% on mobile and above 45%

1 2

Years

DPS (in €)

CAPEX (spectrum included)/revenue (%)

� Equity doubled3

€ bn

32,3

68,0

2002200220022002

/2/2/2/2

2011201120112011

9,0

4,0

2002200220022002

X2,5X2,5X2,5X2,5

2011201120112011

€ bn

30,0

14,0

2003200320032003 2011201120112011

X2X2X2X2

14,4%

2010201020102010

13,2%

20112011201120112009200920092009

11,4%

1,00 1,00 1,00 1,00

0,000,25

0,48

1,001,20 1,30 1,40 1,40 1,40 1,40

'98'98'98'98 '99'99'99'99 '00'00'00'00 '01'01'01'01 '02'02'02'02 '03'03'03'03 '04'04'04'04 '05'05'05'05 '06'06'06'06 '07'07'07'07 '08'08'08'08 '09'09'09'09 '10'10'10'10 '11'11'11'11

1414

main debt raising transactions in 2011and early 2012

� €6.1bn debt raised since January 2011(1) with a wide diversification: 10 different markets tapped in total

� very attractive cost of funding at 3.82%

� 96% of the €6bn back up line successfully extended by 1 year to January 2017, demonstrating continued strong support from a wide range of 29-core banks

� very strong liquidity position at approx. €€€€16bn16bn16bn16bn

� low dependence on bank funding with 88% of outstanding debt directly from debt capital markets

insight

1st semester � €1.250bn opportunistic issuances

� €580m exchange of a structured bond into a vanilla bond

� €670 m dual tap

� $2bn Yankee

� $1bn 5-year @ 2.75%,

� $1bn 10-year @ 4.125%

October

� €525m raised across different segments (HKD, CMS, CHF benchmark)

� €500m securitisation of trade receivables (extension from 2 to 5 years + doubling of size)

2011

September

November

December � € 520m raised (TEC10, Schuldschein, HKD)

� £250m raised, maturity 2050 @ 4.76% (after swap in €)

� Samuraï JPY 44.3bn

� €355m securitisation of trade receivables (extension from 2 to 3 years)

2012

January � USD 900m raised, maturity 2042 @ 4.88% (after swap in €)

(1) including $ 900m + JPY 7.5bn in January 2012

* including bank overdrafts; **with new €6bn back-up facilityvs. €14.4bn as of 31st December 2010 with previous €8bn facility

Group liquidity position

in €bn

France Telecom has secured a solid liquidity position at very

attractive conditions

7,5

7,5

FY 2011FY 2011FY 2011FY 2011FY 2010FY 2010FY 2010FY 2010

4,9

12,4

8,6

16,1

credit lines

cash

June � €1bn 10-year bonds at 3%

15

a clear strategic and industrial vision2

16

content

networks

devicesequipment

services

with content providers

with device manufacturers strategic partnershipsstrategic partnershipsstrategic partnershipsstrategic partnerships

with telcos

with OTTs alliances & partnershipsalliances & partnershipsalliances & partnershipsalliances & partnerships

optimization of asset baseoptimization of asset baseoptimization of asset baseoptimization of asset base

aggregation strategyaggregation strategyaggregation strategyaggregation strategy

telco operators benefit from a central position between OTT players,

hardware and software providers : convergence calls for shift from

competition to “co-opetition”

17

1995 +

2000 +

2010 +

mobilevoice

Internet at home

Interneton the move

Internetof things

2005 +

� Fixed VoIP

� IPTV � IPO

� international development

� mobile BB offers

� very high broadband

� NFC, M2M …

France Telecom-Orange has demonstrated its ability to adapt to its

rapidly changing environment

18

20152010

270

data trafficper mobile broadband

subscriber(4)

connected

terminals(1)

usage

video(2)

20152010

20152010

1600

0.8billion

1.2billion

MB per month

+6% p.a.+6% p.a.+6% p.a.+6% p.a.

sources: (1) IDC (2) Cisco VNI (3) Radicati Group (4) IDATE

=

+10% p.a.+10% p.a.+10% p.a.+10% p.a.

20152010

118,000 TB

4,150,000 TB

+104% p.a.+104% p.a.+104% p.a.+104% p.a.

social networks (3)…

+43% p.a.+43% p.a.+43% p.a.+43% p.a.

5.3billion

7.1billion

booming customers appetite for data traffic generates significant

monetization opportunities…

19

improve time-to-market innovation thanks to a review of internal processes

co

re a

ssets

pro

du

cts

an

d s

erv

ices

7 million convergent customers

LTE launched in all European countries, 3G in all AMEA countries

innovate in our current activities

safety,security

and privacy

10 million Orange Money

customers*

cloud

services

€500m revenues*

internet

of things

10 million M2M

SIM cards*

innovate in emerging growth opportunities

communication

services

20 million RCS** handsets*

monetization

of data

services

multiply data revenues

by 2.5*

smart networks

Orange universe

*2015 targets **rich communication suite

… as new business territories translate into new business models

20

« conquest 2015 » strategic plan: a path to shareholder value creation3

21

four key levers to tackle today and tomorrow’s challenges

translating into geography-specific strategies

customers

market

sharedata

growthgrowthgrowthgrowth

co

nverg

en

ce

quality of service

segmentation RAN

sharing

buyinChrysalidefficiencyefficiencyefficiencyefficiency

fib

re submarine

cables

investmentinvestmentinvestmentinvestment

spectrum

auctions

IraqOrange

Switzerland

Democratic Republic

of Congo

portfolioportfolioportfolioportfolio

conquestsconquestsconquestsconquests 2015201520152015

customers

market

sharedata

growthgrowthgrowthgrowth

co

nverg

en

ce

quality of service

segmentation RAN

sharing

buyinChrysalidefficiencyefficiencyefficiencyefficiency

fib

re submarine

cables

investmentinvestmentinvestmentinvestment

spectrum

auctions

IraqOrange

Switzerland

Democratic Republic

of Congo

portfolioportfolioportfolioportfolio

conquestsconquestsconquestsconquests 2015201520152015

22

france: best customer offering to defend leadership

best offersbest offersbest offersbest offerscross selling

new segmentation/price mix strategy

quad-play (i.e. Open)

best content in music & video (Deezer, Dailymotion)

best servicebest servicebest servicebest service1,200 shops nationwide

flagships in large cities

39,000 frontline employees in France

best networksbest networksbest networksbest networksbest mobile network following ARCEP

98% 3G+ coverage of population by end of 2011

fibre rollout

gro

wth

effic

ien

cy

inve

stm

en

tp

ortfo

lio

23

europe, AMEA & Enterprise: attractive growth prospects

be n°2 in Spaintriple our mobile data revenues by 2015double our fixed broadband revenues by 2015

strong

prospect

in Europe

double our revenues by 2015be the n°1 or n°2 everywhere by 2015capture growth in rural areasaccelerate 2G/3G mobile coverage

growth in

AMEA

fixed broadbandsubscribers (2010-13 CAGR)

+12%

customer accesses(2010-13 CAGR)+8%

€ 1bn Enterprise emerging markets revenuesin 2015

develop new growth areas: cloud, video generate 1/3 of our revenues in services in 2015 double our emerging market revenues by 2015enable digital society through partnerships

develop

new areas

in Enterprise

gro

wth

effic

ien

cy

inve

stm

en

tp

ortfo

lio

24

2011-2015 performance leversperformance program and procurement JV benefits (€bn)

* original performance program was targeting €1.5bn savings over 2009-2011

annual

savings

in €bn

2010 actual vs. 2010 actual vs. 2010 actual vs. 2010 actual vs. 2008 cost base*2008 cost base*2008 cost base*2008 cost base*

2015 planned vs. 2015 planned vs. 2015 planned vs. 2015 planned vs. 2010 cost base2010 cost base2010 cost base2010 cost base

France 0.36 0.9-1.1

Europe 0.55 0.9-1.1

AMEA - 0.1-0.2

OBS 0.17 0.2-0.3

ICSS 0.16 0.1-0.2

total

group1.21.21.21.2

2.5, of which more 2.5, of which more 2.5, of which more 2.5, of which more than 60% by 2013than 60% by 2013than 60% by 2013than 60% by 2013

France � customer experience improvement� operational excellence� IT improvement� channels automation� content business model change

Europe � RAN & network sharing� near-shoring� customer care transformation� IT renewal & optimisation

AMEA � services platform mutualisation / industrialisation policy

� synergies within the zone � customer journey excellence

OBS � international network profitability� sales performance improvement� G&A improvement

IC & SS � productivity gains on labour costs2012e

0,2

0,9

0,5

0,8

2015e2014e2013e

OPEXCAPEX

savings

from

procurement

JV with DT

focus on operational perfomance: at least €3bn in annual savings by

2015, boosted by the procurement JV

gro

wth

effic

ien

cy

inve

stm

en

tp

ortfo

lio

25

group headcount evolution (FTE)**an acceleration of retirements in France

the most steady decrease of employees on domestic markets

quasi-stabilisation of workforce in France and at group level by 2015

*estimated in 2000; ** full time equivalent

adapt conquer

∑ 2011-2013 2013-2015

~€26bn

guidance (excl. exceptional

items)

7.5% CAGR

� France average age is 46.8 years while Group’s is 43.2 years

� 30.4k cumulative estimated departures in France due to retirement over 2011 to end 2020

� part time senior plan (TPS): a cumulative estimated decrease of around 6.5k FTE over 2010-2015

� structural headcount changes already done over the last few years with a -32% net decrease in France between 2000 and 2010

� slight reduction of headcount (FTE) at group level and in France in 2010

insight

TEF* (incl. Atento)DTFT

20052000 2010

40

60

80

100

FT net decrease of 49k over 10 years

group pyramid ageing est. natural attrition in France,

in thousands

8

6

4

2

202020152010

0.7

2011-2013~1k / year

2014-2016~1.5k to 2k / year

2017-2020~5k to 6k / year

part time senior plan to anticipate and smooth demographic challenge

outside France

France

6k

4k

2k

06050403020

gro

wth

effic

ien

cy

inve

stm

en

tp

ortfo

lio

FY 11

++++0.2%0.2%0.2%0.2%

165,533165,533165,533165,533

other

+647

Poland

-1,098

France

+786

FY 10cb

165,198165,198165,198165,198

26

invest in customer satisfactioninvest in customer satisfactioninvest in customer satisfactioninvest in customer satisfactionIT, networks capacity & modernisation,front-line

proactive leadership in VHBB networksproactive leadership in VHBB networksproactive leadership in VHBB networksproactive leadership in VHBB networkswith expectation of more predictable regulation

CAPEX optimization program CAPEX optimization program CAPEX optimization program CAPEX optimization program joint sourcing with DT, swap 2G/3G, network sharing, etc.

prioritiesprioritiesprioritiespriorities

tight tight tight tight management management management management

of CAPEXof CAPEXof CAPEXof CAPEX

12.2%

2010comparable basis

12.6%

2011-13average

as % of revenuesas % of revenuesas % of revenuesas % of revenues excluding FTTH in France

CAPEX to peak in the 2011-13 period 10.0%

2014-15average

capex under control and focused on growth: customer satisfaction

and next generation network

CAPEX evolution CAPEX evolution CAPEX evolution CAPEX evolution in € billion

of which FTTH in Franceother CAPEX

2010comparable

basis

2011-13 (avg)

5.6 6.2

0.1 0.3

gro

wth

effic

ien

cy

inve

stm

en

tp

ortfo

lio

27

FranceFranceFranceFranceEuropeEuropeEuropeEurope

excl. Franceexcl. Franceexcl. Franceexcl. France AMEAAMEAAMEAAMEA

2G ~100% >66%

3G+95%

of which 74%

3G launched in most

countriesHSPA+

55% with HSPA 14.4

from HSPA 7.4 to

HSPA+42

MDF DSLAM

coverage100%

99% in Poland

> 600k fixed broadband

users

ULL in Spain

and Belgium

IP TV /

DSL

coverage

62%57% in

Poland

Orange mobile and fixed networks at the forefront of competition which will accelerate with LTE and FTTx transformations

population population population population coveragecoveragecoveragecoverageend of 2010end of 2010end of 2010end of 2010

developing infrastructure to extend coverage of fixed and mobile networks across the footprint

deploying networks in the AMEA zone

contributing to economies development through fibre deployment – France

€2bn CAPEX plan over 2010-2015

11 millions homes passed by 2015

ambition to be #1

accelerate 2G and 3G mobile coverage+12% 2G sites per year (CAGR 2010-2013)X 2,5 3G sites between 2010- 2013

open up African open up African open up African open up African

continent to continent to continent to continent to

develop develop develop develop

broadband…broadband…broadband…broadband…

gro

wth

effic

ien

cy

inve

stm

en

tp

ortfo

liofixed and mobile networks : our main asset to generate value

28

� no bid on soccer rights

� ~€200m cash savings on a full year basis

� acquisition of 49% Dailymotion

� OCS change in business model, agreement with Canal+ taking a 33% stake

� Orange Switzerland, €1.6bn enterprise value

� February 2012: Austria, announcement of sale to Hutchinson, €70m net proceeds expected

disposalsdisposalsdisposalsdisposals

� Emitel, gain on disposal €197m and cash proceeds €410m

non-core business

� Congo: 100% stake in CCT, 21st AMEA country, price: €153m

� Iraq, partnership with Agility to take a 44% stake in Korek Telecom, path to control by 2015, price: €177m

� February 2012: Egypt, on-going negotiation with OTMT for an early buy-out of their shares and on a new shareholding structure.

corebusiness

acquisitionsacquisitionsacquisitionsacquisitions

content strategy focused on partnerships, aggregation and distributioncontent strategy focused on partnerships, aggregation and distributioncontent strategy focused on partnerships, aggregation and distributioncontent strategy focused on partnerships, aggregation and distribution

highly selective and flexible M&A policy (2011 achievements)g

row

the

fficie

nc

yin

ve

stm

en

tp

ortfo

lio

29

latest results and main financials4

30

in €m

FY10cb

FY11

actual

var.comp

basis key points

revenue 46,020 45,277 -1.6%� regulation impact: -€748m

� FY excl. regulation: +0.0% yoy

restated EBITDA* 15,846 15,083 -4.8%� regulation impact -€227m

� impacts from VAT in France + Egypt & Ivory Coast crisis -€288m

� limited erosion thanks to management of commercial costs in H2

in % of rev 34.4% 33.3% -1.1pts

CAPEX 5,584 5,770 +3.3%� CAPEX ratio ramp-up in FY11

in line with 2011-2013 trendsin % of rev 12.1% 12.7% +0.6pts

operating cash flow(restated EBITDA –

CAPEX)

10,261 9,313 -9.2%� double adverse effect:

lower EBITDA and higher CAPEXin FY11 than in FY10

net debt

(net debt/EBITDA)

31,8401.95x

32,331**

2.09x**• mid-term target leverage ratio

of ~2x

strong set of results in 2011 despite most challenging environment

*see slides 64 for restatements **including January 2012 cash out for DPTG litigation & 800 MHz auction in France

FY11FY11FY11FY11

31

resilient group revenue thanks to international portfolio contribution & strong commercial dynamics in a transforming French market

� sustained mobile and fixed broadband acquisitions in a transforming French market– high level of mobile gross adds (+1% yoy) – data-only revenues at 20.7% of mobile service revenues, +10% yoy (i.e +2.2pts)– fixed broadband share of net adds maintained at ~20%

� continuous financial and commercial outperformance of Orange Spain– leader in mobile portability at +110 k– revenue growth of +2.3%

� European countries revenue growth ex reg (+0.4%) & emerging countries back to growth– positive swing in Romania (ex reg)– +6.3%* growth in emerging countries with notable recoveries in Egypt and Ivory Coast

� EBITDA margin erosion of -1.7 pts* – initial impact of our roaming hedge in France– tight control of commercial and content costs, flat at group level and opportunistic management

between acquisition and retention

� pursuing CAPEX trend to pave future growth, despite macro-economic headwinds– launch of H+, upcoming experimentation of 4G & FTTH deployment in France– ongoing 3G deployment elsewhere: Spain, Egypt…

� preserving balance sheet strength– M&A focus on footprint consolidation: increasing stake in Egypt under better financial conditions than

previously agreed, with no impact on balance sheet – continuously demonstrating a solid liquidity position and an attractive credit profile

* yoy cb

1Q121Q121Q121Q12

3232

in €m1Q11

cb1Q12

actual

var.compbasis key points

revenue 11,124 10,922 -1.8%� regulation impact: -€195m

Q1 excl. regulation: -0.1% yoy vs -0.2% in Q4 11

restated EBITDA* 3,689 3,432 -7.0%� regulation impact -€54m

in % of rev 33.2% 31.4% -1.7pts

CAPEX 1,073 1,097 +2.2%� CAPEX in line with our anticipation

in % of rev 9.6% 10.0% +0.4pts

operating cash flow(restated EBITDA* – CAPEX)

2,616 2,335 -10.7% � coherent with our FY guidance

summary of 1Q 2012 achievements

*see slide 24 for restatements **source Bloomberg

balance sheet position as of March 2012

€9.4bn of cash

covering more than 2012 & 2013 debt redemptions

€16.9bnliquidity position

9 yearsnet debt average maturity as of Year End 2011, again extended thanks to 900mUSD raised on January 2012 with a 30 years maturity

1Q12 achievements

5.3%

weighted average cost of debt in bonds**

1Q121Q121Q121Q12

33

flat revenue ex. regulation thanks to international portfolio contribution

in €m1Q12

actual∆ vs

1Q11cb

∆ vs 1Q11cb

excl. reg.

% of Group revenue** yoy* ∆

France 5,401 -4.2% -1.7% -1.0pt

Spain 981 +2.3% +4.5% +0.4pt

Poland 832 -3.4% -2.3% -0.1pt

ROW 2,134 +2.0% +3.1% +0.7pt

Enterprise 1,734 -3.1% -3.1% -0.2pt

ICSS 410 +10.2% +10.2% +0.3pt

eliminations -569 -3.0% -3.0%

Group revenue 10,922 -1.8% -0.1%

*cb; ** based on contributive revenues

47.4%

8.9%

7.5%

18.7%

14.9%

2.6%

1Q12 segment contribution to group revenueyoy* evolution, excluding regulation, in €m

----20202020

++++65656565

----56565656

+38

++++18181818

----7777

++++42424242

----93939393

IC&SS

eliminations

o/w +€63m from Africa & ME

1Q121Q121Q121Q12

34

pressure on EBITDA mainly coming from revenue decrease

in €m

restated EBITDA* evolution in 1Q12

----7.0%7.0%7.0%7.0%

1Q12

3,4323,4323,4323,432

IT&N, property, G&A & other****

-20

labour opex***

-86

commercial & content costs**

-6

interco costs

+56

revenue

-201

1Q11 cb

3,6893,6893,6893,689

� the increase in labour opex, ex one-off, is coming

– from an underlying 2011 price effect

– and from recent recruitments (social commitment)

� in France

– the recently agreed 2012 salary increase is below the 2011 level, in-line with our wage-restraint policy

– no “exceptional” profit sharing expected for employees in 2012

– since the beginning of 2010 : ~ 6,000 employees have entered the TPS

insight

31.4%

33.2%

commercial & content costs quasi flat since 2H11 without impacting sales performance

-110-110-110-110-136-136-136-136

-6-6-6-6

1Q124Q11

++++16161616

3Q11

----17171717

2Q111Q11

excluding FranceFrancetotal

yoy cb var. in €m

*see slide 24 for restatements **o/w €59m of content provision used in 1Q12 ; *** o/w TPS provision of €37m used in 1Q12 ;

****o/w €18m of content provision used in 1Q12

o/w -€30m due to phasing effect, to be reversed in the course of the year

1Q121Q121Q121Q12

3535

� a strategic and pragmatic financial decisionstrategic and pragmatic financial decisionstrategic and pragmatic financial decisionstrategic and pragmatic financial decision: it represents a partial hedge vs. Free mobile retail impact

� contract is technically effective since the 10th of January 2012

� contract is covering voice & data roaming with a security cap in usagessecurity cap in usagessecurity cap in usagessecurity cap in usages. Orange guarantees the QoS of its network

� first revenue estimate (at contract signing as of March the 3rd, 2011): €€€€1bn over 6 years1bn over 6 years1bn over 6 years1bn over 6 years

� revenue estimates* after two months of contract implementation: could increase to could increase to could increase to could increase to above above above above €€€€1bn over 3 years1bn over 3 years1bn over 3 years1bn over 3 years

� traffic from Free mobile customers could be could be could be could be substantially higher than expected, without substantially higher than expected, without substantially higher than expected, without substantially higher than expected, without harming the QoS for Orange customersharming the QoS for Orange customersharming the QoS for Orange customersharming the QoS for Orange customers

focus on france : successful commercial counter-attack & wholesale hedge ramping-up

commercial success of our reactive offers…

Trading up from prepaid to postpaid

x4 in March yoy

210k Sosh

+183k net adds in Q1

o/w 1/3 acquisition

1.7 million

Open customers

+66%gross adds yoy

in Q1

… demonstrated by strong consumer contract gross adds in the 2nd half of the quarter

first half of the quarter: -19% yoy

second half of the quarter: +31% yoy

wholesale: 2G/3G roaming agreement

*revenue estimates depend on different factors, mainly Free mobile ramp up in terms of number of customers and network roll out

1Q121Q121Q121Q12

36

focus on france : portability requests back to pre-4th entrant launch level

-1,038kchurners

+ 837knew customers

i.e. -201k

net customers losses

-1,274kchurners mostly due to January portability requests backlog &

prepaid

+ 860knew customers

i.e. -414k

net customers losses

-2 312kchurners

+ 1 697knew customers

i.e. -615k

net customers losses,

( equal to -2,3% ofcustomer base)

Orange net addsfrom the 1st of January to the 15th of February 2012

� Orange net adds in Q1

impact of 4th mobile entrant on net adds

0

100

200

300

400

500

600

700

800

W51 &W52

W1 &W2

W3 &W4

W5 &W6

W7 &W8

W9 &W10

W11 &W12

W13 &W14

disconnections from portability requests(more than 54% of the total quarter portabilities result from January requests)

portability processing delay

portability trend

slow down

portability

requests back

to pre-4th

entrant launch

level

Dec. January February March

portability requests

contract churn impacted by massive portability requests in January & early Feb.

Orange net addsfrom the 16th of February to the 31st of March 2012

1Q121Q121Q121Q12

37

CAPEX to sales ratio at 10.0% in 1Q12, up +0.4pt yoyinvesting for differentiation & value

en route towards new generation access in

France for a new customer experience

� Spain

– higher investments due to RAN renewal

� Poland

– investments on fixed broadband programon track as agreed with Polish regulator

� 912 k lines cumulatively delivered

� RoW

– coming back to a normal level after a strong activity on 3G and submarine cables in Africa

� LION2 cable launched on April 12th

� ACE expected to be launched in 2012

insight

* maximum theoretical speed.

3G

HSPA+ Dual carrier

42 Mbit/s

LTE

100 - 150 Mbit/s

HSDPACat. 10

14,4 Mbit/s

UMTS

PS384 kbit/s

EDGE

80-100 kbit/s

GPRS40 kbit/s

2G

4G

H+

3G+

Les différents débits DL théoriques maximum

� Orange triples the speed of its 3G+ network by moving to HSPA+ (H+) technology at 42 Mb/s for an additional fee of 10€

� > 50 % of the population covered with H+ since 24 November 2011, including 40 major urban cities

� acceleration of LTE investments in France

� Marseille first pilot city for 4G starting in June 2012

� continued ramp up in FTTH investments & in customer acquisitions: more than 100k so far.

1Q121Q121Q121Q12

38

� as anticipated, personal revenue down -1.1%*, in a strong competitive market– increasing regulation weight (up 29%*) only partially

compensated by positive effects such as:– national roaming agreement partially hedging the

negative retail impact (personal service revenue growth ex-reg)

– Open broadband revenue driving «BB, MVNOs & equipment» revenue

� annual broadband revenue growth recovery at +5.6%, +3.7pt yoy– end of the negative 2011 reprice effect– sustained broadband customer growth at +3.9%,

fuelled by Open

1Q12 France financials mobile revenue down as anticipated, but successful counter-attack

* yoy cb

1Q12 home revenue*: -4.2% (–3.1% excl. regulatory impacts)

1Q12 France revenue*: -4.2% (-1.7% excl. regulatory impacts)

in €m

1Q12

3,112

wholesale & others

-5

broadband

+55

PSTN

-149

regulatory impacts

-39

3,250

1Q11cb

in €m

1Q12

2,648

broadband, MVNOs & equipment

+86

customer base

-16

regulatory impacts

-126

1Q11cb

2,676

1Q12 personal revenue *: -1.1% (+3.8% excl. reg.)

+28

network usage

incl. national roaming

service revenues – 4.7%+0.5% ex reg

BB revenue growth at +5.6%

in €m 1Q11 cb 1Q12 var cb

revenue 5,636 5,401 -4.2%

personal 2,676 2,648 -1.1%

home 3,250 3,112 -4.2%

eliminations -290 -359

insight

1Q121Q121Q121Q12

39

1Q12 France home KPIsgood commercial performance confirmed

ADSL net addsADSL market share

1Q12

~19%*

44.7%*

4Q11

36.6%

45.1%

3Q11

37.2%

45.2%

2Q11

27.6%

45.3%

1Q11

22.4%

45.5%

� strong commercial performance with +60 k net adds; ~19% share of net adds thanks to churn control

� strong contribution of Open (+312k net adds) to our BB gross adds (30% of gross adds), an efficient weapon facing other bundled offers attractiveness

� broadband ARPU at €36.1, +€0.4 yoy driven by a favorable access mix effect

� decreasing PSTN line loss trend thanks to marketing actions

+1.1%

1Q12

36.1

29.1

7.0

1Q11

35.7

28.4

7.3

access

services

ARPU, in €/month

home usage annual rolling

broadbandquarterly

ARCEP market figures

insight

1Q12

34.6

16.2

18.3

4Q11

34.634.8

1Q11

17.916.8

16.718.0

ADSL market & conquest shares

naked ADSL & other

PSTN & ADSL

PSTN only

Var 1Q11 vs.4Q10

var 1Q12vs 4Q11

variance in thousands of lines

+103k

ARPU home usage driven by better broadband mix

PSTN line losses slowing down

net copper quarterly loss reduced by 28% yoy

PSTN

internet

* company estimates

-370 -267

-341

+314

-213

-471

+262

-188

1Q121Q121Q121Q12

40

� marketing strategy to protect value-customer base– strong commercial performance in a very active

market led by Open, limited editions and Sosh offers – -1.5pt of market share o/w 0.5pt linked to double SIM

equipment & prepaid losses– contract customers mix +1.1 pts yoy– 81% of voice contract customers under commitment

� -0.4% ARPU variation yoy excl. regulation: thanks to a managed reprice effect

� -2.2% sequential ARPU***, -0.3% excl. regulation

� data ARPU continues to grow driven by smartphone penetration

1Q12 France personal KPIsrobust mobile gross adds

* network market share, incl. national roamers ** company estimates ***sequential defined as 1Q12 vs 4Q11cb – 12m rolling ARPU

insightnetwork market share growth

retail market shareactive network market share*

39.9%41.0%

40.0%40.7%

45.8%

1Q12

45.6%45%

38.4%**

3Q11

45.8%**

2Q111Q11 4Q11

44.8%

ARCEP market figures

data only revenue

sms revenue

+8.3 pts+8.3 pts+8.3 pts+8.3 pts

1Q12

38.7%

18.0%

20.7%

1Q11

18.5%

1Q10

35.9%

17.4%

30.4%

15.1%

15.3%

+ 34 pts+ 34 pts+ 34 pts+ 34 pts

1Q12

51%

1Q11

30%

1Q10

17%

smartphones as a % of contract customer base

data revenue growth & smartphone penetration

in €

voice

sms

data

259 231

7462

66

1Q11cb

384

59

367

----4.3% yoy4.3% yoy4.3% yoy4.3% yoy----0.4% excl. reg.0.4% excl. reg.0.4% excl. reg.0.4% excl. reg.----2.2% YTD***2.2% YTD***2.2% YTD***2.2% YTD***

1Q12

annual rolling ARPU evolution

+5.9%

+12.5%

1Q121Q121Q121Q12

41

strong contract customer base growth driven by

the success of mobile data offers

improving ADSL customer base, access mix & ARPU

1Q12 Spaintop line growth driven by commercial performance despite economic environment

* yoy cb

+3.4%

1Q12

12,465

7,745

4,720

1Q11

12,059

7,250

4,809

contractprepaid

in 000sx2.2x2.2x2.2x2.2

1Q12

3,737

4Q11

3,190

3Q11

2,598

2Q11

2,062

1Q11

1,679

smartphones & dongles

+6.8%

269

654 814

210252

244

+12%

1Q12

1,293

1Q11

1,150

full ULLpartial ULLbitstream

in 000s+2.4%+2.4%+2.4%+2.4%

1Q12

32.7

27.6

5.1

1Q11

31.9

26.5

5.4

accessservices

in €s

+24%+24%

� mobile revenue up +3.5% ex-reg. driven by contract customer base increase & data revenue– contract churn down to 19.7% (-0.6 pts yoy) and

mobile data customers up by x2.2– continued leadership in mobile portability in Q1’12

� home revenue up +8.6% with fixed broadband revenues up +17%

− driven by ADSL base expansion and ARPU growth, with 63% of VoIP customers

insight

62%60%63%57%

1Q12 Spain revenue*: +2.3%(+4.5% excl. regulatory impacts)


revenue 959 981 +2.3%

personal 789 797 +1.0%

home 170 184 +8.6%

1Q121Q121Q121Q12

42

1Q12 Poland revenue*: -3.4%(-2.3% excl. regulatory impacts)

smartphone base up +31% yoy driving a +20% increase in contract data ARPU

increase in the customer base brings

broadband revenues back to growth

in 000s

1Q12 Polandrevenue driven by mobile and promising commercial indicators in BB


revenue 862 832 -3.4%

personal 439 440 +0.3%

home 481 455 -5.4%

eliminations -58 -63

* yoy cb; ** TV penetration in retail BB customers; ***company estimates

+1.3%

1Q12

14,61314,61314,61314,613

6,927

7,685

1Q11

14,42014,42014,42014,420

6,962

7,457

contractprepaid

+31%

1Q12

2,2562,2562,2562,256

1Q11

1,7251,7251,7251,725

number of smartphonesin customer base

47%48%

in 000s+2.2%

1Q12

2,3482,3482,3482,348

2,236

112

1Q11

2,2972,2972,2972,297

2,270

27

other broadband3P Broadband

497 521

139 142

+4.2%

1Q12

663663663663

4Q11

636636636636

basic TVpay TV

27% 28%**

� mobile revenue up +2.6% ex-reg. with a +1.3% increase in the customer base– focus on defending our #1 value market share position

(30%***) – +31% yoy increase of smartphones in the base helping to

drive contract data ARPU up +20%

� home revenue down -5.4% with ongoing decline in PSTN due to lower usage & fixed-to-mobile substitution partially offset by improving trends in broadband– new 3P offer driving fixed broadband growth: +57 k net

adds in Q1 and +4.2% qoq growth in TV customers

insight

1Q121Q121Q121Q12

43

43

� European countries: revenue up +0.4% excl. reg.

– Belgium: revenue up +2.3% ex-reg� following aggressive competition � objective of re establishing market position

following the recent launch of Animals offers

– Romania: swing to revenue growth +0.1% excl reg

� good commercial momentum on prepaid

– Moldova & Armenia: � contract customer base increase fuelling

revenue growth

� Africa & Middle East countries: revenue back to growth (+6.3%*) after 4 quarters in a row of stability due to political headwinds

– region’s mobile customer base increased by +16%**

– revenue growth helped by recovery trend in Egypt (+3.5%*) & Ivory Coast (+17%*)

– strong contribution of Cameroon (+14%*) and operations in countries such as Uganda (+57%*) & Niger (+29%*)

� Egypt: growing customer base up +7.5%*

– high level of gross adds (+44%*) even if high churn

– increasing penetration of smartphones and rising demand for internet and data services underpinning revenues

1Q12 Rest of the Worldgrowth fuelled by emerging countries including IC & Egypt

mobile customer base growth, yoy

* yoy cb; **yoy

in €m 1Q11cb 1Q12 var cb

total ROW revenuetotal ROW revenuetotal ROW revenuetotal ROW revenue 2,091 2,134 +2.0%

European countries 1,009 994 -1.5%

Africa & Middle East 941 1,001 +6.3%

o/w Egypt 308 319 +3.5%

other countries 144 142 -1.6%

revenue growth in %*

insight

growth coming from Africa and Middle East

1Q12 revenue* : +2.0% (+3.1% excl. reg.)

Iv Coast ++++9%9%9%9%

Cameroon ++++27%27%27%27%

Niger ++++31%31%31%31%

Mali ++++41%41%41%41%

Egypt +3.5%+3.5%+3.5%+3.5%

Iv Coast ++++17%17%17%17%

Niger ++++29%29%29%29%

Uganda ++++57%57%57%57%

1Q121Q121Q121Q12

44

1Q12 enterprisesolid IPVPN and growing networks performance but impending

phasing-out of some legacy networks

in €m 1Q11cb 1Q12 var cb

total enterprisetotal enterprisetotal enterprisetotal enterprise 1,7901,7901,7901,790 1,7341,7341,7341,734 ----3.1%3.1%3.1%3.1%

legacy networks 576 497 -13.8%

mature networks 704 709 +0.7%

growing networks 88 97 +11.0%

services 423 431 +2.0%

in €m

+6%+6%+6%+6%

1Q121Q11*

131131131131 138138138138

� legacy networks: sharper decline in legacy data as some products (e.g. x25 product) are about to be phased-out

� mature networks: IPVPN supported by robust demand in international markets, compensating the termination of analogue broadcasting

� growing networks: growth driven by VoIP and satellite accesses

� services: growth driven by customer contact solutions and integration services, while market activity for large IT projects has slowed down

insight

in thousands

1Q121Q111Q10

275275275275271271271271272272272272

+2%+2%+2%+2%----1%1%1%1%

revenues with emerging markets still growingmature networks: IPVPN accesses in France

1Q12 enterprise revenue* : -3.1%

*yoy cb

1Q121Q121Q121Q12

45

EE: solid share of postpaid net adds and industry leading postpaid churn

InsightsInsightsInsightsInsights

IndustryIndustryIndustryIndustry----leading postpaid churn*leading postpaid churn*leading postpaid churn*leading postpaid churn*

* monthly average (3 month rolling)

Mobile service revenues +2.9%* ex regulation, £mMobile service revenues +2.9%* ex regulation, £mMobile service revenues +2.9%* ex regulation, £mMobile service revenues +2.9%* ex regulation, £m

regulationQ1/11# Q1/12prepaidpostpaid

1,5411,5411,5411,541

----80808080

1,4611,4611,4611,461

+86+86+86+86

----44444444

1,5031,5031,5031,503

----2.5%2.5%2.5%2.5%

Q1/11# ex

regulation

+2.9%+2.9%+2.9%+2.9%

InitiativesInitiativesInitiativesInitiatives� More network improvements with 3G “Smart Signal” giving

Orange & T-Mobile customers seamless use of both networks, and rollout of 3.5G (HSPA+ 21Mb/s)

� Strong brand differentiation; T-Mobile Full Monty launch and Orange Swapables promotion

� Underlying mobile service revenue driven by growth in postpaid base, 886k net adds in last 12m

� Postpaid, focus on retention as market slows after very active Q4/11

� Investing in future value; 77% (Q1/11: 63%) of postpaid base on 24m contracts

# accounting for bundled fixed broadband revenues and service provider revenues changed in Q1/12 , Q1/11 restated on a comparable basis, see EE press release appendix for details

* Using revised accounting for Q1/12 and Q1/11, +2.6% on the previous basis

Solid market share of postpaid net addsSolid market share of postpaid net addsSolid market share of postpaid net addsSolid market share of postpaid net adds

OrangeOrangeOrangeOrange

TTTT----MobileMobileMobileMobile

1Q121Q121Q121Q12

46

financial objectives summary

47

____________________Source :(1) Latest published ratio (FY11), Telenor excepted (1Q12)(2) OpCF en $ : DT (23,7bn$), Vod (28,2bn$), TEF (36,1)

France Telecom-Orange will continue to implement a strict financial

policy in order to preserve its balance sheet

€ bn 14,7

€ bn 19,0€ bn 16,2

€ bn 26,4

€ bn 6,4

€ bn 18,1

44%44%44%44%56%56%56%56%

52%52%52%52%

31%31%31%31%

€ bn 9,1€ bn 9,1

2012-2013 OpCF

Debt reimbursement 2012-13

… has a debt ratio … has a debt ratio … has a debt ratio … has a debt ratio

at the lowest and a at the lowest and a at the lowest and a at the lowest and a

debt maturity at the debt maturity at the debt maturity at the debt maturity at the

longest of the longest of the longest of the longest of the

European …European …European …European …

…maintain a solid …maintain a solid …maintain a solid …maintain a solid

liquidity position …liquidity position …liquidity position …liquidity position …

0,60x0,80x

1,90x2,00x2,03x2,09x2,14x2,20x2,52x

2,88x

Debt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating Cash----Flows Flows Flows Flows (2) (2) (2) (2)

…and enjoy the …and enjoy the …and enjoy the …and enjoy the

hihest rating in the hihest rating in the hihest rating in the hihest rating in the

sector …sector …sector …sector …

Net debt / EBITDA ratio Net debt / EBITDA ratio Net debt / EBITDA ratio Net debt / EBITDA ratio (1)(1)(1)(1)France Telecom

Légende:Actions des agences de notation depuis décembre Actions des agences de notation depuis décembre Actions des agences de notation depuis décembre Actions des agences de notation depuis décembre 2011201120112011

OpCF en $ : DT (23,7bn$), Vod (28,2bn$), TEF (36,1)

Moody's A3 Stable Baa1 NégatifNégatifNégatifNégatif A3 stable Baa1 stable Baa2Baa2Baa2Baa2 négativenégativenégativenégativeS&P A- Stable BBB+ NégatifNégatifNégatifNégatif A- stable BBB+ stable BBBBBBBBBBBB stablestablestablestableFitch A- NegatifNegatifNegatifNegatif BBB+ Stable A- stable BBB+ stable BBBBBBBBBBBB négativenégativenégativenégative

48

France Telecom-Orange will continue to implement a strict financial

policy in order to preserve its balance sheet




longest of the longest of the longest of the longest of the

European …European …European …European …



Debt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating Cash----Flows Flows Flows Flows (2) (2) (2) (2)

…and enjoy the …and enjoy the …and enjoy the …and enjoy the

hihest rating in the hihest rating in the hihest rating in the hihest rating in the


France Telecom

49

1,77x2,09x2,15x

2,30x2,63x

____________________Source :(1) S&P Telecoms Investor Event 2012 Paris, May 22nd 2012, end of december 2011data (except Vodafone, september 2011) – average maturity of bonds as of 31/12/11 (source: Bloomberg(2) OpCF FT (FT consensus) – OpCF other operators (ThomsonOne)(3) Source Bloomberg

France Telecom-Orange will continue to implement a strict financial policy in

order to preserve its balance sheet

12,9bn€

21%21%21%21%18,2bn€

26%26%26%26%

7,3bn€

53%53%53%53%8,8bn€

52%52%52%52% 15,6bn€18,5bn€

24,7bn€

16,4bn€

OpCF 2012-2013Debt reimbursement 2012-13




longest among longest among longest among longest among

European peers…European peers…European peers…European peers…



Debt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating CashDebt reimbursement and cumulated Operating Cash----Flows 2012Flows 2012Flows 2012Flows 2012----13 13 13 13 (2) (2) (2) (2)

…and enjoys the …and enjoys the …and enjoys the …and enjoys the

highest rating in the highest rating in the highest rating in the highest rating in the


Net debt / EBITDA ratio Net debt / EBITDA ratio Net debt / EBITDA ratio Net debt / EBITDA ratio (1) (1) (1) (1) and average maturityand average maturityand average maturityand average maturity(1)(1)(1)(1)France Telecom

Moody's A3 Stable Baa1 NegativeNegativeNegativeNegative A3 stable Baa1 stable Baa2Baa2Baa2Baa2 Negat iveNegat iveNegat iveNegat ive

S&P A- NegativeNegativeNegativeNegative BBBBBBBBBBBB NegativeNegativeNegativeNegative A- stable BBB+ stable BBBBBBBBBBBB stable

Fitch A- NegativeNegativeNegativeNegative BBB+ Stable A- stable BBB+ stable BBBBBBBBBBBB Negat iveNegat iveNegat iveNegat ive

Legend:Rating changes since Rating changes since Rating changes since Rating changes since January 2012January 2012January 2012January 2012

5,9 years 5,9 years 5,9 years 5,9 years 7,3 years7,3 years7,3 years7,3 years 6,5 years6,5 years6,5 years6,5 years 9 years9 years9 years9 years6,3 years6,3 years6,3 years6,3 years

50

Bonds(3)/bank loans/leases repayments

end of 2011

in €bn

2015

17.0

17.6

>2016

3.0

2.8

2014

4.3

3.9

2013

4.1

3.5

2012

3.3

2.2

bank loans & otherbonds

3.0

2.5

2016(3) excluding TDIRA

� debt raised since January 2011 with 11.7 years average maturity

� emblematic series of 3 transactions placed since November 2010 for €1.3bn at 30-40 years maturity with 4.75% average rate (1)

� best in class average maturity of 9.0 years (and 11.3 years with TDIRA (2))

insight

(1) return swapped back into €(2) when assigning a 50 years maturity assumption

to this perpetual convertible debt

average maturity (4) and net debt evolution

(4) TDIRA: € 1.8bn outstanding of perpetual convertible bonds, not included in average maturity of net debt. if assigned a 50 years maturity, net debt average maturity including TDIRA would be 11.3 years * Net debt as of year end 2011 incl DPTG and 800 Mhz spectrum cash out

debt structure

Moody’s / S&P / Fitch rating A3/A-/A-

% of net debt with a fixed rate 113%

% of bond debt in €* (*after derivatives) 87%

% of gross debt in bonds 88%

average maturity of net debt end 2011average maturity of net debt end 2010

9.0 years8.5 years

average weighted cost of debt in bonds ** - end of 2011 - end of 2010

5.28%5.59%

11

30.930.930.930.9

9.0

10

31.831.831.831.8

8.5

09

32.532.532.532.5

7.3

08

35.935.935.935.9

7.5

07

7.1

06

42.042.042.042.0

6.7

38.038.038.038.0

05

47.847.847.847.8

6.4

04

49.849.849.849.8

5.6

03

44.244.244.244.2

6.0

02

68.068.068.068.0

4.0

01

63.463.463.463.4

4.6

2000

61.061.061.061.0

2.0

99

14.614.614.614.6

6.8

year end net debt, in €bn

average maturity of net debt, in years

32.3*32.3*32.3*32.3*

**source Bloomberg

the Group has reinvested credit quality into the extension of the

average maturity and the reduction in cost of debt

51

adapt to conquer phasing reiterated: 2012 will remain the low point in terms of OpCF

20132012

*excluding exceptional items, such as state employees unemployment insurance

++++€€€€0.3bn0.3bn0.3bn0.3bn

closeto 8,0

closeto 8,3

9,3~9,0

update will be given update will be given update will be given update will be given in 2H12in 2H12in 2H12in 2H12

re- scoping impact of ~0.4bn€compared to initial guidance

OpCFOpCFOpCFOpCFguidanceguidanceguidanceguidance

close to close to close to close to €€€€8bn*8bn*8bn*8bn*(re(re(re(re----scoped)scoped)scoped)scoped)

re- scoped for (mainly) Switzerland, Emitel, CCT and forex. total impact of ~0.3bn€

2011201120112011guidanceguidanceguidanceguidance

2011 2011 2011 2011 delivereddelivereddelivereddelivered

new indicationnew indicationnew indicationnew indication

rererere----scopedscopedscopedscoped2012201220122012

guidanceguidanceguidanceguidance

2012201220122012non renon renon renon re----scopedscopedscopedscoped

2011 and 2012 2011 and 2012 2011 and 2012 2011 and 2012 OpCFOpCFOpCFOpCF(in (in (in (in €€€€bn)bn)bn)bn)

20122011

201320122011

52

div

idend

polic

y

guidance metleverage 2.09x

return confirmed

uncertain environmentpriority to financial structure

variable return based on performance

in a deteriorated macro and financial market environment, our priority is to preserve a safe leverage ratio, i.e.

~2x net debt/EBITDA in the medium term. The Group does not intend to make

any share buy-back in 2012

1.4€ DPS

FY 2011 dividend balance of 0.8€ paid

in June 2012

40 to 45% OpCF pay-out

40 to 45% OpCF pay-out

Interim 2012 paymentof 0.6€ to be paid

in September 2012

the shareholder return policy has become flexible to preserve

a strong balance sheet

53

appendix

54

« France »« France »« France »« France »

Risk?Risk?Risk?Risk?

____________________(1) Based on OECD statistics(2) Bloomberg consensus as at 02 May 2012

France-Telecom Orange – Investors’ Checklist

Telecom Telecom Telecom Telecom

Sector Under Sector Under Sector Under Sector Under

Structural Structural Structural Structural

Threat?Threat?Threat?Threat?

Euro is at Euro is at Euro is at Euro is at

risk? Or risk? Or risk? Or risk? Or

Overvalued?Overvalued?Overvalued?Overvalued?

� France has proven resilient since 2009 with no quarter of GDP contraction(1)

� Strong consumer defensive characteristics: reduced household leverage and relatively stable unemployment rate

� No more than 50% of revenues from France

� France Telecom Orange is more resilient than “France Sovereign” and its CDS is lower

� Digital technologies usage is booming with data traffic rising, tablets, globalization

� Telecom network operators hold the key to these consumer-driven evolutions

� FT-Orange keeps increasing its subscribers

� Usage of FT-Orange services keeps growing

� FT-Orange balanced geographic footprint and complete product offering will allow it to drive and fully benefit from these evolutions

� Euro currency and Eurozone stability have held up despite several quarters of risks, news and Greek crisis development

� Consensus EUR/USD forecasts stable at around 1.29(2)

� FT is not 100% Euro exposed

Potential Potential Potential Potential ConcernsConcernsConcernsConcerns MitigantsMitigantsMitigantsMitigants FTFTFTFT----Orange specificsOrange specificsOrange specificsOrange specifics

55

2011201120112011 2012201220122012

• £6.0-6.5 bn FCF• £6.8bn share buy back (on £15bn

China Mobile and SFR disposals)• 7% growth in DPS

• £5.5 – 6.5 bn FCF• 7% growth in DPS• special £2bn dividend (re. Verizon

Wireless)

• adj. EBITDA of ~ €19.1 bn (constant forex)

• stable to slightly growing FCF from €6.5 bn in 2010

• €3.4 bn remuneration / year for 2011-2012 with a minimum DPS of €0.70 and the rest via SBB

• adj. EBITDA ~ € 18 bn (constant forex)

• FCF ~ € 6 bn• €3.4 bn remuneration and €0.7

minimum DPS• execution and timing of SBB not yet

decided by the management

• EBITDA growth• Capex < € 2bn• FCF growth• DPS at least € 0.85• new €1bn SBB

• EBITDA € 4.7 - 4.9bn• Capex € 2.0 - 2.2bn• FCF € 1.6 - 1.8bn• DPS € 0.90• no SBB in 2012

• revenue growth up to 2%• OIBDA margin in the upper 30s,

with limited erosion yoy• ~€9 bn CAPEX• €1.60 DPS

• revenue growth >1% (constant forex)

• lower OIBDA margin decline than in 2011

• similar CapEx/sales as in 2011• € 1.30 DPS • SBB € 0.20 / share

• slight increase in adjusted net income excluding NBC Universal

• maintain a high cash dividend

• 12% to 15% decrease in EBITDA*• CFFO close to €1.7bn• cash dividends to represent ~45%

to 55% of adjusted net income from 2012 onwards

2012e 81%

2011a 52%

Dividends / OpCFDividends / OpCFDividends / OpCFDividends / OpCF

2012e 31%

2011a 29%

2012e 48%

2011a 38%

2012e 47%

2011a 51%

2012e 32%

2011a 34%

source : group disclosure, consensus Thomson Reuters Knowledge

benchmark on guidance and shareholders’ remuneration

56

stake owned by French state in the Group ranks lowest among

European operators

stake owned by domestic state stake owned by domestic state stake owned by domestic state stake owned by domestic state (domestic state & domestic sovereign fund)

28%32%

51%54%

5%

54%57%

27%27%27%27%

(42% )(42% )(42% )(42% )

Dec. 1998Dec. 1998Dec. 1998Dec. 1998

Sept. 2004Sept. 2004Sept. 2004Sept. 2004

Jun. 2005Jun. 2005Jun. 2005Jun. 2005 (35%) (35%) (35%) (35%)

Jun. 2007Jun. 2007Jun. 2007Jun. 2007

Month. Year Month. Year Month. Year Month. Year (xx%):(xx%):(xx%):(xx%): sale of FT stake by the French stake / xx% representing the state’s stake after sale

(63% )(63% )(63% )(63% )

57

France Telecom-Orange share main features on the stock market

Market Cap2009 45,7832010 40,4262011 37,5942012 29,725

Index Weight Position CAC 40 3,20% 10Stoxx Telecom 8,03% 5Euro Stoxx 50 1,47% 28

Vodafone 32,35%Telefonica 13,16%Deutsche Telekom 10,26%BT Group 8,84%France Telecom 8,03%

Top 5 market cap in the Stoxx Telecom index

Dividend2011 1,40 €2012 1,40 €

Dividend2011 1,40 €2012 1,40 €

Dividend yield2011 9,86%2012 12,48%

Dividend yield2011 9,86%2012 12,48%

5858

a responsible governance support

15 board members*

representing the French State3

independent members7

employee representatives3

board of directors

executive committee

13

3 board committees

strategy committee

audit committee

governance & CSR** committee

*including Chairman **corporate social responsibility *** including CEO

Stéphane Richard, Chairman and CEO

7

� renewal and feminisation at the heart of our governance strategy

� 5 women board members

� active governance in 2011 with:

– 10 board of directors meetings

– 8 audit committee meetings

– 9 governance & CSR** committee meetings

– 1 strategy committee meetings

1 representing the employee shareholders

maingovernance committees

others

4,8%employees68.0%

26,9%French state(and affiliated)Gervais Pellissier, CEO delegate and CFO

executivemembers***

insight

shareholding structure

59

thank you

france telecom orange · january usd 900m raised, maturity 2042 @ 4.88% (after swap in €) (1)...

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